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Friday, August 12, 2011

12/08/2011: US Economy - Consumers' quiet rejection of Obama-nomics

The University of Michigan Consumer Confidence survey for August released to day pushed the index reading to the lowest level since May 1980 in a clear sing that despite all the "Yes we can" rhetoric from the US Administration, American consumers are simply not buying into the Obama-nomics. Or, perhaps, it's the Obama-nomics that is not trickling down to the US households still overloaded with debt and expecting massive future tax increases courtesy of the US Governments' handling of the fiscal spending side.

Historical average Consumer Confidence reading now stands at 85.8 against the Crisis period average (since January 2008) of 67.6. Jimmy Carter Presidency average for Consumer Confidence was 69.9. Barak Obama's tenure in office so far averages 69.3. The new low for Obama presidency is on par with Jimmy Carter's lows, which takes some doing.

Here's the chart mapping the course of Consumer Confidence from November 2008 cyclical low of 55.3 to today's abysmal reading of 54.9. Short of the Irish banks shares, I have not seen anything that scary, folks.

To me, the above picture reinforces my view that the US economy is now on a firm track to hit recession in Q3-Q4 2011. Unless, of course, the Fed steps in with US$1.5-2 trillion of fresh cash to, this time around, bailout actual American households.

Disclaimer

This blog represents my personal views and is not reflective of the views or opinions held by any company, contractor, client or employer I work for currently or have worked for in the past. These views are not an endorsement to take any action in the markets or of any political position, figures or parties.

“It is not true that people stop pursuing dreams because they grow old, they grow old because they stop pursuing dreams.” Gabriel Garcí­a Márquez

Nassim Nicholas Taleb was asked whether public protests in Athens is a Black Swan Event. He replied: “No. The real Black Swan Event is that people are not rioting against the banks in London and New York.”

"Getting worse more slowly is not the same as getting better", Prof. Brad DeLong